Transportation Fundamentals and Logistics Assignment # 1 - Assessments Worksheet Module 9 Case Study 4.2 Hardee Transportation P. 125 of the class textbook - Novack/Gibson/Suzuki/Coyle Overview The Hardee Transportation Case Study focuses on what costs are considered when pricing freight, and how to price out freight movements knowing these costs. Every General Manager or pricing analyst (at a transportation company) makes decisions like this regularly as the company considers taking on new freight/routes. The assignment will take you @ 3-5 hours to complete You will be assessed on your achievement of the following course learning outcomes: Determine costing and pricing for modal transportation services -------------------------------------------------------------------------------------------------------------------- Case Study 4.2 - Hardee Transportation One of Jim Obriens customers has presented him with an opportunity for a significant amount of freight moving into a new market for Hardee. Hardee is a truck load carrier primarily moving freight in the East/West market in the USA. Although it has some movements in and out of Canada and Mexico, Hardee has focused on moving freight in eastward and westward directions. Hardee has dispatch centers located throughout the United States, which have some dock capacity. The new move would be between Pittsburgh and Miami. Hardee has avoided this market because of the lack of backhaul opportunities that exist eastbound form Florida. However, this new move offers a significant increase in volume for Hardee. A complicating factor in this move is the request that Hardee perform sorting and segregation at its dispatch centers. Each shipment will consist of straight (one product) pallet loads of various types of consumer goods freight destined for a retailers distribution center in Miami. Sorting and segregation at Hardees locations would consist of breaking the pallets and sorting the freight by the retailers store locations, then repalletizing them into rainbow (mixed products) pallets for each store. Hardee has never experienced this type of work before. Jim knows that he needs to put some type of costs to this move to make sure that the moves are profitable. Because of the larger volume involved, not covering Hardees costs in pricing could result in large losses for Hardee. The relevant information for costing this move is as follows: Equipment Cost Data: Equipment Purchase Price: Line- haul tractors = $120,000 Line haul trailers = $40,000 Depreciation Tractors = 5 year straight line Trailers = 8 year straight line Interest Tractors = 6% APR for 5 years Trailers = 6% APR for 8 years Fuel 3.83 per gallon for diesel Line-haul tractors = 6.0 miles per gallon Labour Line-haul drivers = $.45 per mile Pickup and delivery (PUD) drives = $30 (fully loaded) per hour Dock Workers = $25 (fully loaded) per hour Miscellaneous Insurance cost = $0.067 per mile Maintenance cost = $0.152 per mile Billing Cost = $1.95 per freight bill Tractors and trailers are available for use 24 hours a day, 365 days a year Administrative overhead cost = 10 percent of total cost of move Dock facility cost = $15 per hour Line-haul vehicle averages 45 mph between origin and destination Route and Time of Move The shipment (45,000 lbs) originates at a customer location in Pittsburgh, located 20 miles from Hardees dispatch center. A PUD driver is dispatched from the Hardee location at 8:30am on January 12th, 2015 and arrives at the destinations at 9:00 am the same day. The shipment is loaded from 9:00am to 12:00pm. The PUD driver departs the customer location at 12:00pm and arrives back at the Hardee dispatch centre at 12:30 pm. The sort process starts at 12:30 pm and ends at 8:30pm on January 12th. It requires unloading the trailer, sorting and repalletizing the load. The operation requires two dock workers, each working the same trailers for 8 hours in the dispatch center. The line-haul portion begins with the vehicle being dispatched from the Pittsburgh location at 8:30pm on January 12th and travelling to Charlotte, North Carolina, a distance of 481 miles, and arriving at Charlotte at 7:12 am on January 13th. The driver rests from 7:12 am until 3:12 pm. The trip continues with the vehicle departing Charlotte at 3:12 pm on January 13th and travelling to Jacksonville, Florida, a distance of 399 miles, arriving at Jacksonville at 12:06 am on January 14th. The driver rests from 12:06 am until 10:06 am. The line-haul portion concludes with the vehicle departing Jacksonville at 10:06 am and travelling to the customers location in Miami, a distance of 369 miles, and arriving at the distribution center at 6:18 pm on January 14th. The Line haul driver stays with the vehicle while it id being unloaded (2 hours unload time). The driver then deadheads at 8:18 pm form the customers distribution center and arrives at a Hardee dispatch center located in Miami at 8:48 pm, a distance of 15 miles from the distribution center. Instructions Based on the above information, please provide answers to the following questions: 1. What are the pickup, sort, line-haul and delivery costs to Hardee for this move? 2. What is the total cost of this move? Cost per cwt? Cost per revenue miles? If Hardee would put two drivers in the tractor for the line haul move, there would be no rest required for drivers during the line-haul move. What would happen to the total costs